CEO Burd Says Safeway's Making Supermarkets Exciting Again

NEW YORK -- Safeway's success over the past year can be attributed to many things, such as its new lifestyle format, better quality fresh foods, and proprietary products. But what it all boils down to, as chairman, president, and c.e.o. Steve Burd pointed out during his presentation yesterday at the Goldman Sachs Global Retailing Conference is that they have made the traditional supermarket experience exciting again.

"No one had really branded the shopping experience," he said. "We'd like to bring our prices closer to the price operators, but our focus is on delivering value to the consumer, and that's how they perceive us."

And that's exactly what the chain has done through its new products, and the lifestyle format. "The content of the stores has had as much - or even more - of an impact than the new format," said Burd. "The lifestyle format just happens to be a great merchandising vehicle for it."

This content includes quality perishables, proprietary brands, and a center store tailored to the local demographics. "With the improvement in perishables, we've seen an increase in primary shoppers," said Burd. "And the new O organic brand has been a huge success."

Added to this is Safeway's gift card subsidiary, Blackhawk, which is growing its sales at more than 20 percent per year. In addition to supplying Safeway's stores with a selection of approximately 300 gift cards, the company currently has displays in 60,000 locations nationwide.

Safeway's performance is also a result of operational efficiencies and shrink reduction efforts. "With the increased perishables offerings, we're saving hundreds of millions of dollars with better shrink control efforts," said Burd. "This directly impacts gross margin."

The overall strategy has been working. Coming off of a strong 2005, Burd points out that the evidence of the company's strategy paying off is in its ability deliver "good numbers on top of good numbers," something he expects Safeway to continue do into the future.
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